Earnings Beat: Rainbow Children's Medicare Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Rainbow Children's Medicare Limited (NSE:RAINBOW) defied analyst predictions to release its annual results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 7.5% to hit ₹12b. Rainbow Children's Medicare reported statutory earnings per share (EPS) ₹20.89, which was a notable 10% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Rainbow Children's Medicare

Taking into account the latest results, the most recent consensus for Rainbow Children's Medicare from four analysts is for revenues of ₹14.0b in 2024 which, if met, would be a solid 16% increase on its sales over the past 12 months. Per-share earnings are expected to step up 13% to ₹23.46. Before this earnings report, the analysts had been forecasting revenues of ₹13.5b and earnings per share (EPS) of ₹22.83 in 2024. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

It will come as no surprise to learn that the analysts have increased their price target for Rainbow Children's Medicare 5.8% to ₹979on the back of these upgrades. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Rainbow Children's Medicare, with the most bullish analyst valuing it at ₹1,010 and the most bearish at ₹925 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 16% growth on an annualised basis. That is in line with its 19% annual growth over the past three years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 14% annually. It's clear that while Rainbow Children's Medicare's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Rainbow Children's Medicare's earnings potential next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Rainbow Children's Medicare. Long-term earnings power is much more important than next year's profits. We have forecasts for Rainbow Children's Medicare going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Rainbow Children's Medicare has 1 warning sign we think you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.